MP3tunes files for bankruptcy, EMI vows to fight on

One of the early music-focused digital locker services, MP3tunes.com, has filed for bankruptcy, its founder, Michael Robertson, has confirmed. The announcement brings to an end the latest venture from Robertson who, as the creator of the original MP3.com, has been innovating in digital music for years, though usually in a way that aggravates the big record companies.

And, Robertson argues, it was the actions of one such aggravated major label that drove his latest company into the ground. As previously reported, EMI first sued MP3tunes.com in 2007 and, although in the main the arguments put forward by Robertson’s lawyers prevailed in court last year, the major is appealing and a new round of court hearings are due to kick off this month.

In part the case considered the legalities of services that let users upload their MP3 collections to a remote server and then re-download or stream them to other net-connected devices. In most territories (though not the UK) the upload bit is allowed within copyright law under the user’s private copy right principle, but some rights owners have argued that if a service like MP3tunes.com then lets people stream those MP3s back to another device through a user-friendly bespoke player, then that isn’t covered and a licence is required. MP3tunes.com did not concur, and nor did Google or Amazon who subsequently launched similar services.

However, when the case finally got to court last year, much of the deliberations actually focused on a periphery services offered by MP3tunes called Sideload.com, which let users store and share links to music files online, the majority of which linked to unlicensed content. There was some criticism of MP3tunes from the judge with regard to Sideload.com, though even there, in the main, Robertson’s arguments – that, because his company operated a takedown system to remove links to unlicensed music the service was allowed under US law – prevailed.

Indeed, although neither side won outright, last year’s court rulings did seem to favour Robertson more than EMI, leading the former to accuse the latter of deliberately dragging out its legal assault against his company, knowing that – even though their legal arguments might not stand up in court – there was always the option of draining the smaller defendant’s resources and driving them out of business that way.

Robertson told C-Net: “Four and a half years of legal costs and we’re not even out of trial. MP3tunes has no choice but to file [for bankruptcy]… this is what they do. The labels engage in multi-year legal battles and put small companies through hell for years. EMI went to other companies and demanded that they not work with us. They went to retailers, as one example, and forbid those guys to work with us”.

Meanwhile, according to Music Void, the MP3tunes.com chief added: “At every opportunity EMI dragged out the legal process, making it costly and burdensome. One example is the interrogation of company employees in all-day inquisitions called depositions, where attorneys try to trick people into making admissions. In our case, they deposed not just management but nearly everyone in the company, all the way down to clerical help and customer support personnel. They even paid $25,000 to get an ex-employee to agree to a deposition. From management they deposed everyone – some multiple times – with me getting deposed three separate times”.

For its part, EMI says that Robertson has decided to shut down his locker company now, just before appeal hearings are due to begin, because he fears this time he will lose. But, the major adds, with Robertson himself also a defendant in the case, bankrupting the company will not enable him to avoid liability for the copyright infringement it believes the entrepreneur enabled.

In a statement to C-Net, the major said: “Since November 2007, EMI Music and EMI Music Publishing have been engaged in a lawsuit with MP3tunes and its principal, Michael Robertson, in connection with Mr Robertson’s facilitation of widespread copyright infringement on MP3tunes.com and Sideload.com. These sites have built their businesses on the unauthorised distribution of music, at the expense of EMI’s songwriters and artists”.

“Now on the eve of trial, and after an ongoing press campaign claiming that MP3tunes would fight to vindicate its ‘right’ to infringe, Mr Robertson has filed for bankruptcy protection for MP3tunes in the Southern District of California. After four and a half years of Robertson’s bluster and rhetoric, it is apparent to EMI that Robertson has finally realised that his case has no merit”.

“While Robertson may believe that MP3tunes will be able to escape liability in the upcoming trial through this bankruptcy, Robertson himself is still a named defendant in the case and the court has already determined that both he and MP3tunes have infringed EMI’s copyrights. As such, he is facing personal liability both for infringements that the court has already determined have occurred and for the further alleged infringements that will be addressed at trial. Accordingly, EMI will continue to pursue its case against Robertson, to ensure that its songwriters and artists are properly compensated for their creative work”.

So all in all, while the ending of this story may have already been revealed, the final chapters could still make for interesting readings.

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